August 13, 2020 13:20
Status-conscious young Koreans increasingly splurge on luxury products to flaunt such wealth as they have, saving little or nothing as buying a home becomes unaffordable. When credit card companies released expensively produced and impressively named cards recently, they were surprised how many customers in their 20s and 30s applied for them.
These cards are usually favored by the comfortably middle-aged due to the higher fees. But a staffer at a credit card company said, "I didn't expect that young people, who are the biggest mobile transaction users, would show such enthusiasm for physical premium cards. It looks like credit cards have become a source of pride among them because they can flash them around."
All that glitters is not gold, but Samsung Card's American Express Gold card, which only upgraded an existing plastic card, has seen a huge uptake from younger customers since it was launched last month. Daily issuance surged a staggering 748 percent and customers in their 20s and 30s accounted for 31 percent and 40 percent of total applicants.
In contrast, customers in their 40s and 50s have become more sober.
To get that card, a customer has to pay W55,000 for the production and an annual usage fee of W300,000 (US$1=W1,185). But a Samsung Card staffer said, "It looks like younger customers are willing to accept the costs to get a luxurious-looking credit card."
Hyundai Card rolled out the "limited" Zero Edition 2 premium plastic last month made of posh-looking metallic stuff. Yet even though the benefits are the same as for an ordinary piece of plastic, issuance soared 2.5 times, with customers in their 20s and 30s accounting for 85 percent.
Overall consumption has declined amid the coronavirus epidemic, but young consumers who can afford it are splurging on luxury products.
Spending by young consumers on high-end products at Shinsegae Department Store surged 30.1 percent on-year during the first half of this year. That compares with a 19.7-percent growth in 2018 and 20.3 percent last year, when the going was good.
At Lotte Department Store too, 20-somethings spent 25.7 percent more on luxury products over the same period and 30-somethings 34.8 percent. Major department stores' sales declined 14.2 percent during the first half of this year, but luxury product sales rose 9.2 percent.
This dance on the volcano can be seen in the car market as well. According to the Korea Automobile Importers and Distributors Association, 37 percent of the 80,195 customers who bought an import in the first half of this year were in their teens, 20s or 30s.
Some 1,362 out of 2,665 BMW 520s sold in the first six months were bought by customers in their 20s and 30s. The sedan costs a cool W60 million. Pundits say ample surplus cash is being spent domestically as the coronavirus epidemic prevented people from spending it overseas.
Another factor behind this trend is the mentality of younger Koreans to live for the day. One 32-year-old who used his savings to buy luxury products as gifts for his family said, "Soaring apartment prices have made me feel deprived and frustrated, so I want to pursue what little satisfaction I can get right now."
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